T-Mobile to ape O2 pay share, not rush-job

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T-Mobile will address all its indirect channel partners at a roadshow on December 9 about its plans to introduce an ongoing revenue share in the New Year.

Following confirmation T-Mobile has cleared out its stockists, axing 537 connectors and one distributor in total, national sales manager John Fannon (pictured) said T-Mobile will follow O2’s lead and introduce its own revenue share scheme in due course.

“We are looking at revenue share as a different method of reward, and we are having a lot of regular discussions around it,” Fannon told Mobile News.

“It’s fair to say early next year is when we will be in that position. We have already had some formal discussions with distributors on potential revenue share models. O2 were first in the market, and the word is Orange and all the other networks will follow.”

As it stands, independent T-Mobile connectors get conventional commission payments upfront – based upon tariff and bundled extras, dealers earn around £350 upfront for a BlackBerry connection on a £35 monthly tariff, up to £226 for mobile broadband, and up to £95 for Windows Mobile subscriptions; payments from which they stump up for hardware.

O2’s new dealer remuneration scheme, launched last month, sees its partners, instead, earn between 30 per cent and 40 per cent of customer revenues (of over £40 per month) over the lifetime of their contract, depending upon whether they connect directly or indirectly with the network.

Distributors have interpreted the new scheme differently, and are handing down different rates to dealers.

But Fannon suggested T-Mobile would not be replicate O2’s model exactly come 2009. He refused to rule out continuing with some form of upfront payment for partners.

He said: “I wouldn’t say that upfront commission payments are dead, but I would certainly say the light is fading. But even a revenue share model would offer an upfront payment of some kind, just not quite as much.”

Dealers last week expressed their appreciation of T-Mobile’s consultative and open approach to such changes, and suggested T-Mobile had so far handled matters much better than the rushed manner of O2’s move.

Dealers claimed to prefer a compromise deal, at least in its infancy, where a smaller percentage of ongoing revenue offsets an upfront payment, enough to cover kit and remain competitive.

“Ongoing revenue is a good idea, and one which will benefit the channel,” said one major T-Mobile connector.

“But T-Mobile must get it right first time, and not do what O2 did, and leave us in the dark until the last minute.

“Everyone I have spoken to about ongoing revenue wants a mixture of the two – an upfront payment and an ongoing revenue. Removing it all together has made it difficult for many, and is difficult to adjust to, and some are struggling.”

Another dealer said: “Complete ongoing revenue only works with cash-fixed companies. It will only work if the customer base is loaded with high-spending business customers, and these are frankly difficult to come by.

“Every network will do it sooner or later, but the test will be on those who do it right, and it could change the views and direction we have with the networks.

“O2 got it all wrong. The networks that get it right will be the most favourable, and not the ones that give you the earth, and then claw it all back.”

O2’s move on payments based on £40 ARPU for all connections, and distributors’ commercial interpretation of it for partners, has infuriated many independents – even those who had by and large admired O2’s management of third-party business connections until this point.

They claim the bar for payment  is too high, in particular when  additional lines on business contracts go for £12 per month, each, and thereby adulterate choice high-revenue connections.

Fannon said T-Mobile’s mass-termination of marginal players will enable it to maximise resources available to continuing partners – and so help dealers to raise user revenues just as, presumably, their own revenue targets are hiked.

He said T-Mobile would invest more better deals, training and point-of-sale materials for its remaining base. Fannon warns data should be sold virtually as standard.

“We’ve had a very strong data message for some time, particularly around Windows Mobile and BlackBerry,” he said. “The only thing I can say is future revenue share models will encourage dealers to be more active in that area, as it is more beneficial to them. 

“We are trying to make sure we have valuable customers on board, that we support and that our partners support. By default, a lot of those customers should achieve a reasonable ARPU. If dealers do what we expect of them, their bases will [comprise] pretty healthy spenders.”

He added: “This is a market that’s right for dealers. It requires their expertise.”

 

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